I refer to Koon Yew Yin's letter Diesel solution to high oil prices , which raises some interesting points. Other cost factors notwithstanding, the market price for diesel is actually higher than that of petrol. Diesel costs more to distill and refine from crude oil.

The price of diesel on the world commodity market is also more volatile as its production is reduced when demand for jet fuel and kerosene increases (diesel, jet fuel and kerosene are obtained from a similar 'level' of distillate, so producing more of one means having less of the other).

Diesel is cheaper in Malaysia because it is subsidised more. The higher subsidy is feasible as consumption of diesel is generally restricted to the transport industry, and that has the added benefit of reducing the cost of goods transported using diesel-powered vehicles as well. If more private vehicles started running on diesel and the consumption of diesel surpassed that of petrol, the government would lose more money at current pump prices.

Diesel is indeed dearer than petrol in Europe, but the price difference is about an equivalent of RM0.25 per litre, which is a relatively small amount by First World living standards. Hence other factors come into play, like fuel efficiency and road tax. Road tax is lower for diesel cars as they emit less CO2 (the major pollutant), but for a petrol car and a diesel car that emits the same amount of CO2, the diesel car pays higher road tax because of higher levels of other emissions.

Diesel engines are also more expensive and require more frequent oil changes. It is said that the average diesel car needs to be on the road for about eight years to recoup the extra costs compared to owning a similar petrol car. The money recouped comes chiefly from better fuel efficiency and lower road tax.

So with factors like car prices, fuel prices, road taxes, and maintenance costs being comparable enough to consider, it is therefore unsurprising that some European buyers choose diesel cars while others choose petrol cars. I leave it to readers to decide how these factors would come into play for the average Malaysian, and whether the government would still subsidise more for diesel if diesel consumption increased significantly due to demand from private diesel-powered vehicle owners.